How Much Should a Freelancer Charge Per Hour?
At first glance $1/hour payout for a freelance data entry provider is better than most office clerical jobs that are offered full time. One can just make a quick computation of how lowly paid an employed worker is by just taking the total monthly salary divided by the number of hours spent on the job each month. But, is being a freelance data entry provider better than being employed as a data encoder or clerk in a huge multinational company?
In getting self-employed, there are other important factors which must be taken into account. Success in freelancing means that one must be able to understand one’s personal and business cash flow – the resulting hourly rate should be competitive as well as still make a good living.
Look at the Freelance Job Marketplace Rates First!
Typical rates of data entry providers run anywhere from $1 to $5 per hour on many freelance sites: most offers seem to favor hiring to those who are willing to take the lowest $1 per hour rate. Personally, I didn’t think this kind of pay is enough for the freelance data entry provider to live comfortably – which is further confirmed with the estimate I had outlined below (assuming that the freelancer is honest and wants to update all contributions).
This computation assumes a single freelancer living alone without any dependents and doesn’t even need to rent a place to stay.
|
PERSONAL |
||
| SAVINGS | 10% to 20% of personal salary recommended | P 2,625 |
| Food and household costs | P 4,000 | |
| Electricity | P 1,000 | |
| Social Security Contributions | P 1,500 | |
| Recreation | P 1,000 | |
| Cell Phone load | P 300 | |
| Personal needs | P 1,000 | |
| Philhealth Contributions | P 100 | |
| PAGIBIG Contributions | P 100 | |
| Income tax | typically 20% to 30% of taxable income | P 1,000 |
| Others | gifts, transportation, unexpected expenses | P 500 |
| TOTAL | p 13,125 | |
|
FREELANCE BUSINESS |
||
| Internet bill and landline | up to 384 Kbps internet assumed | P 1,000 |
| Repair/maintenance/upgrade | parts replacement, repair | P 1,000 |
| Consumables | paper, printer ink | P 500 |
| TOTAL | p 2,500 | |
TOTAL: P 15,625 / month or P 187,500 / year
| Actual number of weeks each year | 52 weeks |
| Estimated number of holidays/vacations | - 2 weeks |
| Estimated downtime due to sickness/emergencies | - 2 weeks |
| Estimated downtime due to emergencies | - 2 weeks |
| TOTAL | 46 weeks |
Estimate number of working hours per week = 40 hours /week (understand that not all of those 40 hours are billable hours)
Estimate average number of billable hours per week = 5 hours / day x 5 days = 25 hours /week
number of hours worked each year = 25 hours/week x 46 weeks = 1150 hours /year
Assuming $1 = P45 conversion,
minimum hourly rate of full time data entry personnel = P 187,500 / 1150 hours = P163.0435 per hour or $ 3.62 / hour
Clearly, this is not even enough to even cover other monthly expenses such as rent, loans, insurances, education and training and even on buying personal wants such as jewelries and gadgets. With that kind of lifestyle, this particular freelance data entry provider shouldn’t settle for data entry jobs rates that are below $3.62/hour. Non-productive time such as training should also be considered.
Most often, determined freelancers start out by offering data entry first then moving on to learn new skills in writing, forum and Craiglist postings and social media marketing and other jobs that meet the freelance job demand. Those who have IT knowledge can even further get training on programming, graphic and web development.
How much should the recommended hourly rate be?
The computation above is just the minimum rate for the given lifestyle, but how about the recommended hourly rate? The recommended hourly rate is, of course, greater than the minimum hourly rate because one or more of the following are considered:
- Actual work experience
- Job difficulty/complexity of project
- Job skills required for the job
- Workload: higher hourly rates is recommended for those working for one or more freelance jobs at the same time
I get my recommended hourly rate by observation: if I easily get hired at every job I’ve applied to then I know my hourly rate is low. If I get rejected one after another, then I know my hourly rate is just too high. Set a rate which result to 50%-50% rejection as much as possible!
For the above example, I recommended hourly rate should be at $5/hour, which is quite high for Philippine-based data entry providers.
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This was a great eye opening experience for me. A lot of times actually think it is easy to get to start earning freelance online. But the truth is it does take a lot of time, skill and perseverance. To earn big in the online industry one must learn to diversify and enhance themselves to the current demands of the market and forecast the needs of the targeted clients. For those that aren’t ready yet it is always advisable to practice and do it part-time. Once you get the hang of things and you are sure that you can handle it fully then you can consider working on your own.
Thanks for sharing
Really well written and highly informative.
Metz´s last blog ..Empty Streets Special: New Look for the New Year
Yes, it’s very difficult. One of the biggest pressures of freelancing is maintaining a consistent income. Developing skills and experience are a must. Thanks a lot.
Guess this means I am living beyond my means, good post…will keep this in mind the next time apply for jobs…
now I will charge more
sobrang not worth it ang $1 per hour. mga bumbay talaga porke mas mura ang cost of living doon. tsk tsk.
Actually maraming Filipino providers ang kumukuha ng $1/hr. Generally pareho ang rates natin sa kanila.
A friend of mine once told me “it all depends on how you value yourself”.
If you think your time is worth $1 per hour then that exactly translates to you being a dollar-per-hour-person and is also a rough equivalent on your personal outlook.
Having a positive outlook and giving yourself the value you and your hard work deserves can bring more success than one can imagine.
Archon Digital´s last blog ..Philippine Politics and Wordpress Loops Don’t Mix
But overcharging too, isn’t all that good. There is also a limit to how far an hourly rate one must have. I think one must be confident enough to stick to the hourly pay rate that he thinks is just enough against the competition.
keeping it in balance can be tricky
Archon Digital´s last blog ..My Twitter Followers Were Abducted by Aliens
Well, $1/hr if you are starting freelancing work would be ok. After some time if you have other freelance job offers, then its time to think whether your effort for $1/hr is justified or not.
Cheers!
Good and very informative post.
Dan´s last blog ..Hong Kong Experiences
Hi Gem,I’ve read about Odesk before sa mga forums, visited the site too but was hesitant to sign up then. After reading your posts, parang gusto ko na syang i-try.
You should try as early as you can. Sign-up is entirely free: you aren’t required to pay for the membership. oDesk is 100% legit.
You’d actually lose more if you don’t sign up early because more and more people are joining each day, so you’d actually lose from the competition.
Here’s the link to sign up: http://www.theladyprogrammer.com/odesk/